In some countries the SLI form is not a compulsory document, thus it is not used by exporters. However, there are many benefits for correctly completing the SLI provided to you by your freight forwarder.
What is a Shipper’s Letter of Instruction?
Shipper’s Letter of Instruction (SLI) is a document which conveys specific instructions from exporters to agents (usually freight forwarders) appointed to organise the export of a shipment.
In other words, the SLI grants permission to the freight forwarder to act as the authorized forwarding agent. Exporters can use this letter to assign one agent or multiple agents at the same time.
The SLI is not a legally binding document but it is strictly used to gather information about your cargo to ensure your goods are exported in compliance with Foreign Trade Regulations.
It contains shipping instructions. Although it contains somewhat similar information to a Bill of Lading, it is not equivalent to a B/L.
Instead, forwarding agents use information in the SLI to fill out the BOL on the exporter’s behalf. Then, they use this information to make the correct and necessary transportation arrangements.
The SLI outlines directions for the carrier on how to handle, store, load and unload the shipment effectively or without any physical damage to the products. It also provides other transportation and documentation instructions.
Refer to the section What details are provided in shipping instruction?
Is Forwarding Instruction different from SLI?
Forwarding Instruction is a document similar to Shipper’s Letter of Instruction. The difference is that Forwarding Instruction is used when an exporter is dealing directly with the actual shipping line instead of a forwarding agent.
When do you need a Shipper’s Letter of Instruction?
Although the SLI form is not a compulsory document in some countries, it is advantageous to exporters. It is needed before a B/L or BOL is issued by a freight forwarding agent appointed by an exporter. Some countries require that the SLI form be submitted together with other shipping documents.
Who fills out the Shipper’s Letter of Instruction form?
Since it is issued by an exporter to a forwarding agent, it is the exporter who fills out the SLI form. The exporter has to convey what is necessary for the agent to execute the transportation and to fill out the Bill of Lading on the exporter’s behalf.
Once the exporter has completed the SLI form, he sends it to the agent with other export paperwork. In a way, the SLI is like a cover memo for the paperwork and offers a summary of information for the agent, or agents, if there is more than one.
Who files the Shipper’s Letter of Instruction?
The forwarding agent does the filing. Information from the SLI is filed in the Electronic Export Information (EEI) and sent to the Automated Export System (AES), if this system applies to the country of export.
Is an SLI required for export?
For some countries it is, but not for others. It is best to check with your local authorities and the country to which the goods will be exported to. In the United States of America, it is required for all exports.
Is a Shipper’s Letter of Instruction mandatory?
Generally speaking, it is not, but it may be mandatory for certain countries. Nevertheless, it is a good practice to have this document for your freight forwarder.
Refer to the section Why is a Shipper’s Letter of Instruction important?
Which types of shipments need an SLI?
Most freight shipments require it regardless of cargo type. The US, in particular, needs the SLI for its exports.
In fact, the National Customs Brokers and Forwarders Association of America (NCBFAA) has created a Shipper’s Letter of Instruction Model that meets the export regulatory reporting requirements of the US. This model acts as a guide for agents which want to create their own company-specific SLI.
Why create a Shipper’s Letter of Instruction for multiple freight companies
Each time an exporter deals with a freight forwarding agent or company, the exporter must complete a SLI form. If the exporter must deal with multiple different companies, it will have to fill out several SLI forms, which may appear different although they have the same content.
Freight forwarders usually create their own SLI forms. They like to have their own templates or layouts so that they can include their logos as well as their terms and conditions.
Filling SLI forms of different layouts can be time-consuming and tedious. A possible solution to this problem is for the exporter to create a SLI form for all the freight companies that it needs to engage.
Why is a Shipper’s Letter of Instruction important?
The SLI form serves multiple purposes:
- give formal instructions on transportation and documentation to forwarding agent
- provide export control and reporting information to forwarder
- written record of instructions from exporter to forwarder
- consolidate instructions and information on a single document
- secure method of giving correct information to forwarder
- avoid miscommunication and misunderstandings between exporter and forwarder
- save time for forwarder since he need not sift through different documents for information
- authorize forwarding agent to file Electronic Export Information (EEI)
- provide a backup to EEI filing
- authorize agent to transmit to the Automated Export System (AES)
- establish best practice for exporter
- facilitate better service from forwarders which are new to the export industry or which are unfamiliar with export control requirements
- can instruct forwarder to screen cargo on exporter’s behalf by giving consent in the SLI form
What details are provided in shipping instruction?
Here is a list of fields on a SLI form (may vary or have more fields in some countries):
- Contact details of Sender and Receiver
- Notify Party (3rd party, if required)
- Shipper’s Reference Number
- Shipment type
- Requires pickup
- Port of loading
- Port of discharge
- Vessel name
- Voyage number
- Container number
- Seal number
- ISPM Packing details
- Country and State of Origin (product)
- Value of goods sold
- Hazardous cargo – if Yes, UN#, Class, Packing Group
- Shipment under Letter of Credit
- Shipment insured
- Shipping Marks
- Documentation Instructions
- Total number of packages
- Total gross weight (kgs / lbs)
- Total packing size (cbm / cuft)
- Commodity / Nature of goods
- Special instructions
- Signed declaration – signatory company, name and date of authorized signatory
We elaborate on some of these fields below.
Contact details of Sender and Receiver
Contact details refers to company name, office address, phone number and email address. The company address must be complete, stating the area or postal code, and country. In some countries, the company registration number may be required.
Some SLI forms only need contact details of the Shipper, Consignee and Forwarder. Some are more detailed and may need details of all or some of the following:
This refers to the exporter or seller of the goods, or a representative appointed by the seller.
This refers to a person or entity acting as agent for the participating party (a bank or forwarding agent subjected to the delivery of the goods to the importer). They hold full responsibility of the dealing party in interest and possession of items until delivery to the ultimate consignee.
This refers to the end-user for the goods (a company or person) accepting the goods in a foreign country. The ultimate consignee can be a person, party, dealer or actual possessor of goods receiving the export shipment.
The details required are the freight company’s logo as well as their specific terms and conditions.
Carrier or transportation company
If the transportation of freight is outsourced to another company or shipping line, the details of the carrier will be inserted in this section of the form.
If the consignee works with a third party in the country of import, that third party company’s details (company name, office address, phone number, email address) can be added as a Notify Party.
Departure and destination details
Departure refers to the Port of Loading, which is where the cargo will begin its journey. The name of the port, and state or country must be indicated in this field.
Port of Discharge refers to the name of the port (airport or seaport) where the shipment will be discharged. Similarly, the state or country where the port is located should be indicated as well.
The country where the cargo originates from must be indicated in the Country of Origin of Goods field.
Shipment type and pickup details
Shipment type refers to the Method of Dispatch (i.e. whether by sea, air, road or rail) and Type of Shipment (i.e. FCL, LCL, Breakbulk, etc). The vessel or aircraft details may be required or its voyage number assigned by the forwarder.
The exporter or shipper needs to indicate whether the forwarder needs to pick up the freight from the shipper’s address. In addition to that, the shipper also indicates whether an Export Declaration Number and insurance are required.
If there is a definite Date of Departure, the date will be inserted in the SLI form. Otherwise, it will be inserted by the forwarder or carrier.
Cargo details and descriptions
The SLI has detailed fields on the cargo and its packaging details. These include:
- Description of goods – whenever possible, the description should be according to internationally understood terms and labels;
- Number and kind of packages – e.g. how may cartons, type of packaging, placed on pallets or not;
- Gross weight – usually measured by kilogrammes (kg)
- Measurement – refers to total size of cargo in cubic meters (m3)
- Shipping marks & numbers – label showing consignee name and code, pasted on the cargo
- Declaration if the shipment includes any Hazardous or Dangerous goods
- Declaration if the shipment is under a Letter of Credit contract
- Special instructions or additional information on the handling of the cargo
The shipper must state which party is paying for the freight charges i.e. Freight Collect or Freight Prepaid. This would depend on the IncoTerm agreed upon between the buyer and seller. The corresponding Document Instructions and Declared Value must be stated in the respective fields.
The shipper must certify the SLI form and its details by filling in the fields for the signatory company, place, name and date of authorized signatory.
The SLI form regarding the shipment may need to be given to the forwarder together with some of these supporting documents:
- Letter of Credit
- Commercial Invoice
- Packing List
- Export License
- Proforma Invoice
- Paperwork for hazardous or dangerous goods
Each country has some SLI-related requirements that an exporter needs to meet. The US government expects these additional documents:
1. Validated License number or General License symbol
It is an export license number for the commodity being shipped. It authorizes exports without needing an application by the exporter to the Office of export Administration. Each license has a designated symbol, such as LVS and GBS.
2. Export Control Classification Number (ECCN)
The number is given by the U.S. Department of Commerce whenever an exporter/importer has a mention of SED or AES record.
It is advisable to check whether the format of a SLI form meets your country guidelines and the minimum requirements to avoid last-minute interruptions. Having a freight forwarding company, which pays special attention to documentation and which is an expert in the import-export industry, can be very helpful.
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